Tag: crude oil analysis

All of the top commodities have rebounded amid the dollar's weakness recently, but copper didn't follow the pack to make gains. I think we should take a chance as this misbehavior will not last for long.

Chart 1. Copper-Oil Correlation: Huge Divergence!

Chart courtesy of tradingview.com

The crude oil is very strong these days, although last time we have been witnessing its comparative weakness to copper. It looks like the Double Bottom reversal pattern is still making the game for oil with the first strong barrier at the $50 level.

This time, copper overreacted to the short-lived drop of crude hitting the $2.06 area, and this gap that we can see on the chart above kept at the following strong rebound. And then another weird thing happened – crude oil had a minor pullback and continued its upward move while copper overreacted again down to the previous low area at $2.06, this time with even larger divergence. Now look at the left part of the chart, the current gap reminds me the one-year-old situation – oil had stalled at the end of May 2015 while copper overcame it with a new high and then it dropped sharply to run down crude. Therefore, there is a high probability of copper catching up soon with the current oil price corresponding to $2.40-2.50 copper price levels.

Let's look at the copper chart below to find it out. Continue reading "Copper Bites The Dust Behind Strong Oil" →

Old trading wisdom says, "The Trend is your friend." I hope that you also prefer trending markets as it is the clearest action of market unity. I was patiently waiting for the upside move in oil to exhaust itself and see a clear break of the trend with a daily close and the following open to be below that close. And it happened today. So let's think about the coming opportunities.

Chart 1: Copper-Crude Oil Correlation: Gap Closed

Chart courtesy of tradingview.com

Oil finally managed to close the gap with the copper thanks to a very sharp trend amid a flat move in copper. Although copper peaked earlier than oil, the former started down first, as usual. They began to diverge again as oil fell below the blue support line while copper bounced up from its Thursday low. We will see if oil is still an early indicator of the copper move and if will they both hit new bottoms.

I refreshed the daily charts below to show you the recent moves in detail. Continue reading "Copper Update: Follow The Crude?" →

We have experienced an interesting time recently; almost every commodity is volatile and that provides excellent trading opportunities. Last month I refreshed the copper chart to show the miscorrelation of the two assets and, this time, we can see positive changes in the correlation.

Chart 1. Copper-Crude Oil Correlation: Distant But Synced

Chart courtesy of tradingview.com

As you can see in the chart above, both commodities reversed to the upside on the 11th of February (highlighted with the blue dashed vertical line). Copper managed to shape a higher low and crude oil hit the previous low level, making a new multi-year low, I doubt that we have seen the bottom yet.

Oil won back some disparity, but the gap is still broad and the overall move is flimsy with many zigzags on the graph line. Usually, “black gold” catches up with copper in a few large throws. Copper was less lucky and advanced only 6% compared to the 11% gain of crude. Continue reading "Copper Update: Flying High!" →

If you have read my last update on this metal, you should be aware of a recent miscorrelation between the two core assets. You will see in the chart below that my bold expectations for a rapid recovery of oil didn't come true.

Chart 1 Copper-Oil Comparative Illustration: Investors Choose Metal Over Oil

Chart courtesy of tradingview.com

Neither the first interim low in the middle of December nor the second low in the middle of January could make the much anticipated V-shape rocket reversal. The main reason for that is the oversupply of the oil market. There are rumors that OPEC will soon reach a deal with Russia to cut production for their mutual benefit. This, of course, will cause the price of oil to rise. I think this is a temporary measure and after the short-term rise we will see the price of oil drop again, but it could take some time happen. Continue reading "Copper Update: Bottomed?" →